Mutual funds are popular investment options that offer a simple and effective way to grow your wealth. When it comes to investing in mutual funds, you often have two choices: Direct and Regular plans. Understanding the differences between these options is crucial for making informed investment decisions. In this article, we will explore the distinctions between direct and regular mutual funds, so you can choose the right path to meet your financial goals.
What is a Direct Mutual Fund Plan?
Direct mutual fund plans are designed for investors who want to invest in mutual funds without involving intermediaries like distributors or brokers. In a direct plan, investors directly buy mutual fund units from the Asset Management Company (AMC) without any intermediaries. This results in certain advantages, such as lower expenses and comparatively higher returns than regular plans. Direct plans can be bought either directly with the AMC or can be bought through online through digital platforms.
What is a Regular Mutual Fund Plan?
Regular mutual fund plans are the more traditional approach. In these plans, intermediaries, like financial advisors or distributors, facilitate your investment in mutual funds. They provide assistance, information, and services, but these benefits come at a cost, usually in the form of higher expense ratios because brokerage fees or commission for the broker is also involved.